26 Mar 2020 07:00
26 March 2020
Northbridge Industrial Services Plc
("Northbridge" or the "Group")
COVID-19 update
Northbridge, the industrial services and rental company, today issues the following statement in relation to COVID-19.
Northbridge is due to issue its results for the year ended 31 December 2019 on Tuesday 7 April 2020 and under normal circumstances there would be no reason for this to be delayed. However, in this instance there is a risk of this announcement being delayed, due to the uncertainty relating to COVID-19 and its spread to the countries in which we operate, and in light of the recent advice from the Financial Conduct Authority (FCA) to listed companies to delay reporting. As a result, the Board has decided to give this update to the market.
The health and wellbeing of our staff and their families is our absolute main priority. We are following all government advice in all the countries in which we operate and ensuring that our staff do the same. Most of our locations are still operating normally to support their customers, but others are operating under a business continuity policy with restricted activity.
As noted in our pre-close trading update on 31 January 2020, results for the year ended 31 December 2019 are expected to be in line with management's expectations. Extracts from our unaudited draft accounts for the year ended 31 December 2019 show a strong balance sheet with pre-IFRS 16 net bank debt, excluding convertible debt, of only £2.5 million and pre-IFRS 16 EBITDA of £7.0 million. Our bank facilities with NatWest extend to June 2021. The Group has a worldwide rental fleet with a net book value of £18.5 million, UK and New Zealand freehold properties externally valued at £4.5 million, and a UK debtor book of £1.9 million.
The operations of Tasman in the Middle and Far East continue to trade, but the combination of COVID-19 and the downturn in the oil price is beginning to impact the industry base, in particular restrictions on travel and closed borders which are impeding equipment and rig crew movements. It is too early to tell what the long-term impact on the industry will be, but Q2 and Q3 are anticipated to be quiet as the various governments concentrate their efforts to combat the virus.
With a recession likely in the world's three largest economies of China, the USA and the EU, energy demand is likely to be lower for the rest of 2020 and this may impact on Group revenues. The scale of the slowdown is currently uncertain, but we are already reviewing planned operating expenditure to reduce costs, and reducing capital expenditure to conserve our strong liquidity.
However, as also previously noted in our pre-close Trading Update on 31 January 2020, Crestchic Loadbanks had a record equipment sales order book at the beginning of the year and this has increased further in the first quarter of 2020. The manufacturing supply chains are currently holding up well.
The UK and European hire fleet of loadbanks is substantially used for resilience testing for the back-up power supplies of essential services including hospitals, government buildings, and data centres.
The Board believes that the Group is financially resilient with a low cost base, a robust balance sheet and with capital expenditure requirements which can be quickly adjusted to market conditions. Also, it has confidence in the ability of the Group's trading to recover from a temporary downturn in the coming months.
The effects of COVID-19 on global economic output in 2020 are as yet uncertain. Given the significant current levels of uncertainty, we are unable to provide more explicit guidance on trading, at this point in time, for the current financial year. We continue to monitor the COVID-19 situation very closely and will update the market as the situation evolves.
ENDS
For further information
Northbridge Industrial Services plc 01283 531645
Eric Hook, Chief Executive Officer
Iwan Phillips, Finance Director
Shore Capital (Nominated Adviser and Broker) 020 7408 4050
Robert Finlay / Antonio Bossi / Henry Willcocks
Buchanan Communications 020 7466 5000
Charles Ryland / Stephanie Watson
About Northbridge:
Northbridge Industrial Services plc hires and sells specialist industrial equipment. With offices or agents in the UK, USA, UAE, Belgium, Germany, France, Australia, New Zealand, Malaysia, Singapore, China, Brazil and South Korea, Northbridge has a global customer base. This includes utility companies, the oil and gas sector, shipping, banking, mining, construction and the public sector. The product range includes loadbanks, transformers and oil tools. Northbridge was admitted to AIM in 2006 since when it has grown by providing a high level of service, responsiveness and flexibility to customers, by the acquisition of companies in the UK, UAE, Australia, Belgium, New Zealand and Singapore and through investing further in those acquired companies to make them more successful. Northbridge continues to seek suitable businesses for acquisition across the world.